Does it make sense that we have gotten worse at making violins over the last 300 years, when we have gotten so much better at making just about everything else? Not really. Finally there is some experimental data on the subject, and it doesn’t look good for those who pay top dollar for fancy old violins.
(Hat tip to Dean Strachan)
There is an old quip, attributed to George Bernard Shaw, that if all the economists were laid end to end, they’d never reach a conclusion.
My own experience has always been just the opposite. Most economists think very much alike.
If you want to feel like the smartest person in the room, often a good way to accomplish this is to be the only economist. Frequently, the one economist will say things that make a lot of sense that no one else would ever come up with. When I am that one economist, I sometimes feel like a genius. Until a second economist enters the room, that is. Because when the second economist shows up, he or she often says all the smart things I was going to say, before I can say them. It turns out, it is not the economist who is brilliant, but rather the training we get as economists which leads us to think differently from non-economists, that sometimes makes us seem smart.
I’m going to be in India this week, just for a few days. My time is completely booked except for a few hours on the morning of Friday, Dec. 2. I’m looking for an NGO that works with the downtrodden in New Delhi and is willing to show me around some poor neighborhoods there. In return, I will donate $5,000 to that NGO in appreciation.
Can any blog readers provide guidance on this? I know it is short notice.
One of the first times I met Danny Kahneman was over dinner, just after SuperFreakonomics was published. Shortly after we were introduced, Danny said, “I enjoyed your new book. It will change the future of the world.” I beamed with pride at this compliment. Danny, however, was not done speaking. “It will change the future of the world. And not for the better.” While I’m sure many people would agree with his last sentence, he was the only person who ever said it to my face!
If you don’t know the name, Danny Kahneman is the non-economist who has had the greatest influence on economics of any non-economist who ever lived. A psychologist, he’s the only non-economist to win the Nobel Prize in Economics, for his pioneering work in behavioral economics. I don’t think it would be an exaggeration to say that he is among the 50 most influential economic thinkers of all time, and among the ten most influential living economic thinkers.
I recently had one of the strangest customer service episodes I’ve ever experienced. It took place at Café Bon Appetit in downtown Chicago. A group of twenty of us were eating lunch there. It is one of those places that has many food stations to choose from, then you pay for your food and find a table. There is no table service. It’s a huge restaurant. I don’t think it’s an exaggeration to say that the restaurant can seat 300 people. That is one of the reasons we go there in a big group — there are always plenty of seats.
One of the diners, who is on some sort of vegan, non-gluten health kick, had brought her own lunch. The rest of us had bought our lunch there. We found a table in the nearly completely empty back seating area. About halfway through lunch, the restaurant manager appeared. I assumed it was to thank us for coming and to ask how the food was. It turned out his mission was quite different.
I first met Roland Fryer a decade ago. It didn’t take me long to figure out he was a genius. It took the folks at the MacArthur Foundation a little longer to come to that realization, but they finally got on board last week when they gave Roland one of their high-profile MacArthur “Genius” Awards.
Most of Roland’s research has been devoted to understanding the factors influencing Black economic progress. He’s worked on segregation, the sources of the Black-White test score gap, the reasons why Black longevity is less than that of Whites, and the Ku Klux Klan, among many other topics.
It sounded like a small explosion. That was the first hint that my dream was dying. I was standing on a driving range in Florida. Because I am completely and utterly obsessed with golf, there is no place I would rather be. It makes no sense, but I’ve stopped trying to rationalize it.
As much effort as I invest in golf, I’ve never really had any expectation that I would be an outstanding golfer. So when I’ve had the chance to play with some of the world’s very best golfers, like Luke Donald and Jason Day, it was not the slightest bit discouraging to see, up close, just how much better they are than me. I fully expected them to be as amazing as they are.
All my life I have been far more obsessed with how far I could hit a golf ball than with making low scores. I was an extremely short hitter as a kid, and much of my adult life has been devoted to making amends for that weakness. I’m still not an exceptionally long hitter, but I have probably added 40 yards to my average drive in the last four years. Those gains have fueled the (surely irrational) dream that perhaps I could add another 40 yards over the next four years, in which case I would be a long driver.
A year ago, my wife said to me, “I need you to do me a favor.” I knew that was bad news. A charity she is heavily involved with, Half the Sky, was planning an event in Chicago and she had volunteered me to be the speaker.
In principle, this was no big deal. I speak in front of groups all the time. I can talk about Freakonomics, SuperFreakonomics, and my academic research in my sleep.
I knew immediately, however, that this speech would be completely different. Although I often tell stories about myself and my life, they are never stories about emotions. I am one of the most closed off people you’ll ever find when it comes to emotional topics. I have never learned, or really even tried to learn how to express emotions. I’m not proud of this, it just is the truth.
There was no way, however, that I could speak at a Half the Sky event without opening up my emotions. Half the Sky is an amazing charity – perhaps one of the world’s best – doing incredible work with Chinese orphanages. The only events that ever fully penetrated my emotional wall were the death of my son Andrew and the subsequent, deeply moving process of adopting a daughter (eventually two daughters) from China. More than a decade later, the emotions associated with these two events remain shockingly raw, hiding just below the surface.
James Barron and Sydney Ember write in the New York Times about the upcoming closure of the crown of the Statue of Liberty. If you are skeptical of how the government spends money, this article will fuel your fire.
Barron and Ember write:
Interior Secretary Ken Salazar says it [the crown of the Statue of Liberty] needs a $27.25 million renovation for additional safety improvements that he promised in 2009.
My guess is that, even by government standards, this is a project where the safety benefit per dollar spent is miniscule, or non-existent.
With the exception of a few road course races, most of the NASCAR races are held on ovals. The cars always race counter-clockwise on the ovals, meaning the cars only turn left.
Given all the attention that learning and expertise has been getting, I’m deeply curious as to what would happen if for one race NASCAR went in the opposite direction, so that it was all right turns. I understand that they would probably have to do a lot of work to the cars, because the cars must be optimized for left turns, but put that aside. Would lap times be appreciably worse because the drivers would have trouble cornering? Would there be more crashes? Would the same drivers excel?
I think NASCAR should give it a shot. It would generate a lot of interest. I suspect, both among hardcore NASCAR fan and more casual sports fans.
I’ve even got the obvious name for the race: The Rite Aid 400.
I recently had the chance to read an advance copy of an outstanding book by Daniel Kahneman entitled Thinking, Fast and Slow. The book will be published this fall.
Among the hundreds of interesting ideas in the book, there is one that I simply can’t get out of my head. Referring to how our minds work, Kahneman writes that not only are we sometimes “blind to the obvious,” but also we are “blind to our blindness.” For me, that one sentence summarizes a fundamental insight of his life’s work.
It’s one of those simple insights which is obvious when you think about it, but somehow incredibly easy to forget when mesmerized by the happenings of everyday life, leading to poor decision making.
Coming up with a good name for a problem is often an important part of coming up with a solution. So I’m thankful to Kahneman for planting the phrase “blind to my own blindness” in my brain. The next time I’m about to mindlessly make a terrible choice, I’m hoping that phrase will forcefully interject itself into my internal dialogue, causing me to think more clearly about my decision.
More likely, it will only be after the fact that I become aware that I was blind to my own blindness in a particular setting. At least I’ll have a succinct way of beating myself up.
My good friend and co-author Tim Groseclose has a new book out entitled Left Turn: How Liberal Media Bias Distorts the American Mind. As the title suggests, it has a definite conservative slant. It is not, however, a right-wing rant by any means. Rather, it is a carefully researched and amusingly written book by a highly regarded academic.
I’m bored to death by politics. So I didn’t expect to enjoy Groseclose’s book, but I really did. I’m always surprised when an academic can write for a general audience, but Groseclose definitely has that gift.
As I said in my blurb for his book, liberals will not like what Groseclose has to say, but that is all the more reason why liberals should read his book.
In our books, Dubner and I have argued that economic analysis (at least the way we try to do it) is neither moral nor immoral. We try to start with a question, obtain a set of facts, and then understand where those facts lead, trying not to be prejudiced one way or the other by moral considerations when coming to a conclusion.
Similarly, I’ve never really thought of markets as being moral or immoral.
Mark Zupan, the dean of the University of Rochester’s William E. Simon School of Business, thinks differently. In a recent piece, Zupan makes an argument that most people will find counterintuitive: he claims that free markets foster integrity and cooperation. I’m not sure I fully agree with him, but the basic idea is sensible and straightforward. Markets lead to firms that survive for long periods of time. Reputations are important to firms, which leads them to behave in virtuous ways, not because they’re inherently moral, but because virtue is good for business in the long run.
I always love it when I’ve been doing something one way my whole life, and then someone explains to me there is a better way to do that same thing, and the new way is so simple I can immediately switch and see benefits.
Usually it is a new technology that unlocks the magic. For instance, XM Radio, iTunes and Pandora all fundamentally changed the way I listen to music. My Sonicare toothbrush is a hundred times better than a regular toothbrush. After the creation of seedless watermelons, I would never again intentionally buy one that had seeds. Microwave popcorn is another example.
What is even neater, I think, than a new technology changing things, is when someone just comes up with a better way of thinking about a problem. I’ve done a little bit of reading on the origins of randomized experimentation, and it is fascinating to see how that new and powerful idea emerged.
On a much smaller scale, I’ve recently had that sort of change in my thinking about another issue: how to read putts on the green when playing golf.
A few months back, hundreds of thousands of pages of U.S. government documents were made available to the public through WikiLeaks. I have to say that, at the time, I thought this would be a history-making event. I figured there would be loads of interesting and controversial revelations in the documents. Huge scandals would emerge; heads would roll.
I was recently reminded, while reading a months-old copy of The Economist, just how little of interest has thus far emerged from the documents. The U.S. ambassador to Ecuador was sent home by the Ecuadorians because she had written a leaked cable saying (gasp) that the Ecuadorian police were corrupt. The article mentioned that a similar fate had befallen the American ambassador to Mexico.
Is that it? Is there nothing of importance in State Department cables?
Last week, the Supreme Court ordered California to release at least 30,000 prisoners due to poor prison conditions caused by overcrowding.
This is what economists call a “natural experiment,” or what I prefer to call an “accidental experiment.” The Supreme Court order will be a “shock” to the California prison system, leading to roughly a 10 percent reduction in the prison population there. I used this sort of accidental experiment in a paper I published back in 1996, finding a large impact of mandated prison releases on state crime rates. If my estimates remain relevant to the current time period, I predict that California violent crime rates should rise about 4 percent relative to the rest of the U.S. over the next few years. That adds up to about 80 extra homicides a year.
Five years from now, no doubt, an economics graduate student will analyze the data and tell us what the actual numbers look like. Unless, of course, I beat them to the punch!
I have been remiss in not offering public congratulations to Stanford economist Jon Levin, who recently became the latest recipient of the John Bates Clark Medal, given annually by the American Economic Association to the most promising economist under the age of 40.
Levin is best known for his contributions to economic theory, but my favorite paper of his is one that is quite applied. Levin and co-authors describe their efforts to help a wireless carrier bid more effectively in a government-run spectrum auction.
As noted in a blog post I wrote at the time, the strategies engineered by Levin’s team generated $1 billion in surplus for the company that hired them. The economists did, however, make one dreadful mistake: they agreed to be paid by the hour instead of getting a share of the surplus.
It was like the 1990s all over again when the FBI released the latest crime statistics last week. Violent crime fell by five percent; property crime fell three percent. Those are the sorts of crime declines that were commonplace in the 1990s.
But what was really reminiscent of the 1990s was the way the media covered it. The New York Times is a perfect example. For starters, the set of criminologists who give quotes in the story are the exact same criminologists who were called upon by the Times each year in the 1990s to assess the latest numbers: James Alan Fox, Alfred Blumstein, and Franklin Zimring. (You may remember James Alan Fox as the portent of doom in the abortion and crime chapter of Freakonomics.)
And these experts are just as puzzled by the recent crime drop as they were 20 years ago. “Remarkable,” says James Alan Fox. “Striking,” says Blumstein.
More well-deserved attention for University of Chicago economist John List, whose research is the star of Chapter 3 of SuperFreakonomics and also featured in the last segment of the Freakonomics movie.
Oliver Staley crafts a long piece that both describes some of List’s recent research endeavors and gives the reader a feel for his personality.
Like all economists, apparently, he has a story about potty training his kids:
List believes so strongly in incentives that he offers his own children lottery tickets to do extra math homework, he says. He promised a daughter a trip to Disney World in exchange for her becoming potty trained. The day he made the offer, she used the toilet and was trained, he says.
I was going through a pile of old papers in my office when I found a sheet entitled “Blackboard at the University of Chicago October 5, 2005: Future Nobel Laureates.” I have no idea who brainstormed the list that was written up on the board, or why. I can’t even remember whether I took part in the exercise, although seeing how good the predictions have turned out, I’m going to assert (rightly or wrongly) that I was one of the predictors.
For your entertainment, here is the list of names that were on the board, in their original order.
Electric cars are all the rage today, but some of the smartest people I know believe that moving towards electric vehicles is a terrible idea. Looking casually as an outsider at the unappealing economics of electric vehicles (the need for a new and immensely expensive infrastructure, cars that cost much more than either traditional gas engines or hybrids, limited ranges and long recharging times), I find it hard to understand why the Obama administration is pushing electric cars.
One argument I’ve heard is “national security,” the idea being that electric vehicles would make the United States less dependent on imported oil. Be careful what you wish for, however, because if electric cars become a mainstay, we may be trading one dependence for another that is even more troubling. Ninety-five percent of the world’s output of rare-earth metals today comes from one country: China. By some estimates, demand will outstrip supply within five years. At least with oil we know there are fifty years of oil reserves readily available. Moreover, oil is produced all over the world, limiting the monopoly power of any one country.
Yesterday, I described my own personal moral code regarding government prohibitions, which led me to be outraged by recent actions by the U.S. government shutting down the three major internet poker sites for American players.
Forgetting about my own moral standards, which are probably of interest and relevance only to myself, there are four other reasons why the government actions make no sense:
1) Prohibitions that focus on punishing suppliers are largely ineffective. Prohibition of internet poker is no exception.
When there is consumer demand for a good or service, it is extremely difficult to fight the problem through government punishments of suppliers. Illegal drugs are a good case in point. Americans want cocaine. Over the last 40 years of the “War on Drugs,” we have expended enormous amounts of resources locking up drug dealers. (Contrary to public opinion, the punishment of drug users has been relatively limited; by my estimates 95 percent of the prison time served has been by sellers of drugs, as opposed to users.) Especially when the demand for a good is inelastic, squashing supply is ineffective. Making life difficult for incumbent suppliers entices new entrants eager to meet existing demand.
I was outraged a few weeks back when the U.S. government cracked down on internet poker. It took me a while to figure out why.
One of the most important roles of government is establishing a set of rules under which society will operate. Governments determine property rights and coordinate the provision of public goods. Some frowned upon activities are deemed illegal (e.g. homicide); other favored activities are encouraged through subsidies (e.g. home ownership, education).
Life is all about incentives, as this paragraph from a New York Times article about Bin Laden makes clear:
“When children playing in the fields let a ball fly into the [Bin Laden] compound by mistake, the owners never let them retrieve it but gave them 50 rupees to buy a new one, said one of the neighbors, a woman with a small boy on her hip who gave her name only as Bibi. When the children began to throw balls into the compound on purpose to get more money, the owners kept paying, she said, laughing.”
(HT Jim Covington)
Dubner and I have been thinking a lot these days about pundits who make predictions. The incentives surrounding predictions are completely skewed. If I make a wild prediction, and it just happens to come true, I have strong incentives to constantly remind the world about how my prediction came true. If, as is much more often the case, the prediction is wrong, it is likely to be quickly forgotten because there is typically no one else who cares enough about my failed prediction to go to the time and effort to continually remind others that I was wrong. Thus, even if I am rarely correct, it makes sense to make a lot of crazy predictions.
Which leads me, of course, to the Kentucky Derby. I’ve made Kentucky Derby predictions every year since we started the blog. Rarely have I been correct. But I did, many years ago, publicly and correctly predict that a 50-1 shot would win the race. I cannot tell you how many times I have mentioned that to people. I have been much quieter about the time that the horse I predicted would finish dead last actually won the race, although in its own way that is also quite a feat.
More than any other economist, Nobel laureate Gary Becker has inspired and shaped the work of Steven Levitt. Here’s your chance to submit a question for Stephen Dubner to ask Becker when they sit down for an upcoming video chat. Fire away in the comments section.
This is an amusing little story. WBBM radio reports that, “Elgin police say Gavina-Morales crashed his pickup truck into a curb and dug up parkway grass in the cul-de-sac at the end of Stockbridge Place in Elgin at about 6:10 a.m. Sunday.”
A handful of Washington D.C. schools are embroiled in a scandal over whether teachers corrected wrong answers to boost students’ test scores, and thereby, increase their bonuses.
Two economists walk into a Las Vegas casino. They ask to place a $2,500 bet on the Chicago White Sox to win more than half their games this year. The reply from the casino? That’s too risky.
From a loss-of-life standpoint, the Japanese earthquake/tsunami may well be at least five times more severe than 9/11. While natural disasters in the past have claimed more lives, it’s extremely rare for a developed country to suffer this kind of catastrophe. While the economic losses no doubt take a distant back seat to the human suffering, nonetheless there are many important economic questions to be answered. I can’t think of a better pair of people to do so than Anil Kashyap and Takeo Hoshi.
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